Japan’s 2nm requires three passes

Japan's Rapidus, which strives to achieve the most cutting-edge semiconductor foundry, held a factory groundbreaking ceremony in Chitose City, Hokkaido on September 1. Strive to start mass production of cutting-edge semiconductors with a circuit line width of 2 nanometers (a nanometer is 1 billionth of a meter) in 2027. To achieve mass production, it must overcome three major obstacles: manufacturing technology development, acquiring domestic and foreign customers, and securing huge funds totaling 5 trillion yen.

Rapidus plans to complete the factory building construction by October 2024. After moving in the production equipment, the trial production line will be launched in April 2025. Strive to mass-produce 2-nanometer semiconductors in 2027 and obtain 2-nanometer semiconductor design technology from IBM in the United States, which focuses on semiconductor technology development.

At a press conference held after the groundbreaking ceremony, Rapidus President Azuma Tetsuro said: "The future will be an era when cutting-edge equipment will affect all industries. We hope to create good products that can be passed down to future generations."

One of the issues facing mass production is technical obstacles. In domestic factories in Japan, "computing semiconductors", which are the brains of electronic products, can only produce general-purpose products of 40 nanometers at most. The reason is that Japanese domestic companies have withdrawn from the miniaturization competition that increased semiconductor integration in the past.

While there are no mass production plants for cutting-edge products in Japan and there is a shortage of technical personnel, Rapidus strives to mass-produce next-generation, most advanced 2-nanometer semiconductors by leaps and bounds.

From the perspective of extremely small 2-nanometer semiconductors, semiconductor circuits cannot be processed without lithography equipment and peripheral equipment that support the latest technology of extreme ultraviolet (EUV). These devices are becoming the target of competition around the world.

In terms of semiconductor materials, there are cases where the material structure and ingredient ratio are jointly developed with material manufacturers. Rapidus is also working to secure equipment and materials. Chairman Azuma Tetsuro said: "We will expand cooperation with overseas equipment manufacturers such as Lam Research in the United States and ASML in the Netherlands to achieve successful mass production."

The second topic is customer development. In the field of semiconductor foundry, TSMC holds more than half of the global share. Global semiconductor manufacturers, led by Nvidia in the United States, entrust TSMC with manufacturing. South Korea's Samsung Electronics and the United States' Intel are also involved in foundry manufacturing. In the investment competition that strives to achieve low costs through large-scale mass production, Rapidus has no chance of winning against giant companies.

The plan proposed by Rapidus is to focus on high value-added custom semiconductors. Small quantities and multiple varieties can flexibly meet customer needs, but if the unit price of the chip is not set higher, the investment in development costs and production costs cannot be recovered.

Rapidus President Junyi Koike expressed his opinion: "Compared with mainstream general-purpose products in Japan, the unit price of computing semiconductors is 10 times higher." The company is currently in contact with potential customers such as eight investment companies and large American IT companies. While demand is expected in the supercomputing and artificial intelligence (AI) semiconductor fields, it will not be easy to find customers willing to pay high prices to work with Rapidus.

The last topic is financing. Rapidus estimates that 2 trillion yen will be needed before the trial production line is put into operation in April 2025, and a total of 5 trillion yen will be needed for mass production in 2027. The company received 330 billion yen in subsidies from Japan's Ministry of Economy, Trade and Industry, but plans to seek further support from the Japanese government. In order to raise funds on its own, it is also discussing an initial public offering (IPO).

South Korea and Taiwan have nurtured the world's leading semiconductor companies by providing policy support to specific companies and pooling private funds. Can Rapidus achieve its proposed business plan? Its success or failure will become a touchstone for Japan's semiconductor revitalization.

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